Mark Cuban leads optimism flowing at FSTA, despite industry turmoil

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DALLAS, Texas -- There was no escaping the undercurrent of uncertainty that flowed through the Omni Hotel during the Fantasy Sports Trade Association (FSTA) winter conference this week in downtown Dallas.

On stage, fantasy sports proponent Mark Cuban gave a confidence-boosting keynote speech, and officials for the FSTA laid out a plan of attack to protect an industry under fire. In the hallways, though, questions were more frank and often ominous: "What's going to happen? Are DraftKings and FanDuel going to survive?"

"What I'm up here to tell you is that when things seem to be going against you and everybody seems to be ganging up on you, that's typically when the best (expletive) is about to happen," the ever-confident Cuban told an almost full auditorium Wednesday.

The tone of the conference was set well before Cuban took the stage wearing a hooded, grey sweatshirt for his keynote address.

On Tuesday, the same day the event kicked off, Texas Attorney General Ken Paxton released an opinion stating that daily fantasy sports is a form of illegal gambling under state law. Paxton is the sixth state attorney general to declare daily fantasy a form of gambling in the past four months, joining Illinois, Massachusetts, Nevada, New York and Vermont. (Massachusetts Attorney General Maura Healey believes daily fantasy is a form of gambling, but is legal in her state. Massachusetts is reviewing proposed consumer protection regulations for the industry).

In Texas, Paxton's office declined to speculate on what legal action, if any, would follow the opinion. Cuban said he heard no suits would be filed. More states are reviewing the issue; some even want to make operating and/or advertising daily fantasy a felony. Plus, federal investigations are reportedly underway.

The intensifying controversy did not stop more than 450 attendees -- a record number, according to the FSTA -- from showing up in support of their embattled industry. The turnout was especially impressive considering the event's location was moved from Las Vegas to Dallas just four months ago. The site change was made in protest of Nevada's decision to require daily fantasy operators to obtain a gambling license to operate in the state.

"As an industry, we're going to battle and we're going to win," FSTA president Paul Charchian said in his opening remarks, noting that membership in the association had actually grown since the controversy over the industry erupted in September.

The FSTA's plan is to lobby to clarify the legality of fantasy sports in a 50-state battle. Attorney Jeremy Kudon said 75 lobbyists in 30 states are representing the industry. Nineteen states are considering fantasy sports bills, according to industry site LegalSportsReport. Charchian estimated it could be a two-to-three year battle, but hoped to come out with legal clarity in "40ish" states. Daily fantasy sports are currently prohibited in Arizona, Iowa, Louisiana, Montana and Washington.

"Right now is the time to fix all of this," said former Maryland Attorney General Doug Gansler.

It's a lot to fix, and some, like New York attorney Dan Etna, aren't sure a state-by-state approach is wise. Daily fantasy operators DraftKings and FanDuel are already in the thick of legal battles with attorney generals from Illinois and New York, two heavily-populated states attempting to shut down the industry leaders. And now the opinion by Paxton in Texas is looming over the industry's head.

"I think the DFS community is cautiously optimistic that the industry will overcome most of the legal uncertainty," said Dan Back, a respected industry voice who works at daily fantasy site RotoGrinders.com. "It's hard to know for sure how it will shake down because the passage of legislation is a process that can often time take years to complete and the political machine is highly unpredictable. But it's clear that FanDuel, DraftKings and the FSTA are putting tremendous resources toward resolution."

Charchian said the record turnout at the conference, in the face of the controversy, was reassuring.

"I think a lot of people were walking in wondering if they were walking into a morgue," Charchian said during a Friday phone interview after the conference. "But one of the recurring themes I got from attendees was how happy they were that the energy and positivity and excitement that is sort of inherent in fantasy sports is all still there."

Cuban's speech and interaction with the audience was a big part of that energy. He has invested in Sportradar, a European sports data provider with close ties to the fantasy sports and sports betting world, and FantasyLabs, an analytics site that provides tools to help daily fantasy players optimize lineups. Cuban acknowledged those investments, but said he could walk away from them without issue. He is more concerned about what he believes is hypocrisy from lawmakers and politicians going after the fantasy industry.

"I don't want to stand up here and say that I'm a fantasy sports expert. I'm not," Cuban said. "I think I've played fantasy three times in 10 years. I'm not a DFS expert. I learned it was a game of skill because I realized how bad I sucked. But what I've gotten pretty good at over the past too many years is detecting hypocrisy, detecting stupidity and detecting conditional wisdom that makes absolutely no sense."

Cuban remained adamant that he doesn't believe daily fantasy sports is gambling. But college professors Dr. Andrew Billings and Dr. Brody Ruihley, who presented later in the day after Cuban, found that belief contrasts what a survey of fantasy sports participants showed. The survey, which was distributed through FSTA outlets, asked: "When money is involved, is fantasy sport gambling?" Seventy-percent responded 'yes.'

"Gambling is accepted and gambling is a part of our culture," Cuban told reporters after his speech. "If this is a step toward getting it regulated, formalized and even taxed a little bit, that's fine. This isn't 'no new taxes.' This isn't 'no new regulation. This should all be laissez-faire.' It was the exact opposite. It's an opportunity to do it the right way. But more importantly to get it out of the way so that there's a standardized set of rules that everyone knows to go by. And then fans can just enjoy what they want to play."